Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union
In the last 15 years, the countries of Eastern Europe and the Former Soviet Union have made impressive progress in their historical transition from centrally planned to market economies. In building the institutional foundations of a market economy...
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| Format: | Publication |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2005/01/6485479/enhancing-job-opportunities-eastern-europe-former-soviet-union http://hdl.handle.net/10986/7408 |
| Summary: | In the last 15 years, the countries of
Eastern Europe and the Former Soviet Union have made
impressive progress in their historical transition from
centrally planned to market economies. In building the
institutional foundations of a market economy, they have
developed a vibrant private sector and opened themselves to
international trade. After an initial economic recession,
this has ignited economic growth, which in turn has brought
about higher incomes and reduced poverty. But the transition
and recent growth have been disappointing in one key
area-jobs. In countries across the region, job opportunities
remain scarce. This study focuses attention on the causes of
these disappointing labor outcomes, and points to the
solutions. Why has the job creation record of transition
economies been disappointing? One reason is that the size of
the new private sector that generates jobs is still
relatively small in many of the Region's countries. And
there is still enough room for firms to increase output
through downsizing and retrenchment-what is sometimes termed
"defensive restructuring." And why do firms not
engage in more strategic restructuring? Often, they are
discouraged by the poor investment climate-substantial
risks, barriers, and costs associated with doing business.
Two other factors also play a role. In countries in the
Region with strong institutions and enforcement capacity,
strict employment protection legislation can actually
inhibit hiring. Again, for many firms in the Region, the
lack of adequate skills among available workers also proves
to be a significant constraint to growth. This study
recommends a two-pronged strategy to create more and better
jobs. First, in every country across the Region, the
investment climate needs to be further improved to encourage
new firms to enter the market, and for existing firms to
grow. Second, countries in the Region need to have
institutional and regulatory reform to develop an adaptable
labor market, where core worker rights are effectively
protected, but employers are not unduly constrained in
adjusting the size and skill composition of their workforce
to the changing product demand. |
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